Performance Review: 2013-Q4

After each quarter-end, I review my asset allocation and year-to-date total returns by category. The attached PDF contains my actual asset allocation as of 2013-Q4. Below is a high-level summary of the information contained in the PDF:

Asset Allocation

Actual

Target

Diff.

Cash/Fixed Income

11.10%

11.10%

0.00%

Equities-Domestic

60.57%

59.59%

0.98%

Equities-International

24.02%

25.00%

-0.98%

Employer Equity

4.31%

4.31%

0.00%

Total

100.00%

100.0%

Cash/Fixed Income

11.10%

11.10%

0.00%

Large Cap.

62.20%

64.59%

-2.39%

Small/Mid Cap.

22.39%

20.00%

2.39%

Employer Equity

4.31%

4.31%

0.0%

Total

100.00%

100.00%

Click to enlarge

Asset Allocation

Given the unsustainable low interest rates and the associated future price pressure, I continued to look for ways to lower my overall bond allocation in the fourth quarter. When rates move up bond prices will be negatively impacted.

At the end of the fourth quarter my asset allocation was reasonably close to my target. My philosophy is to buy the best dividend stocks available and adjust my allocation using my 401(k) and other investments, when needed. I will make needed adjusts with future purchases.

2013-Q4 Performance

After under-performing in 2012 and out-performing in Q1/2013, my Dividend Growth Portfolio and the Pocket-Change-Portfolio under-performed the S&P in 2013. Both portfolios underperformed Berkshire Hathaway (NYSE:BRK.B) during the same time period. Below are the YTD performances of various categories along with my S&P 500 (VFINX) and Berkshire Hathaway benchmarks:

Portfolio

LifetimeWtd. Avg.

'13 YTD

Div. Growth Stocks

11.2%

26.3%

Pocket Change (9/08)

12.2%

27.0%

S&P 500

6.5%

32.2%

BRK.B

3.3%

32.7%

Div. Growth vs S&P

4.7%

-5.9%

Div. Growth vs BRK

7.9%

-6.4%

Click to enlarge

When weighted with results from 2008 forward, my income portfolios out-performed the S&P and BRK. As I have previously stated, it is my desire to beat the S&P over the long-run, so I don't pay a lot of attention to short-term performance either positive or negative. For more details on the performance of my income portfolios, including year-by-year performance and cumulative chart, please click here.

Passive Income

For Q4/2013 my passive income averaged $3,174/month, up from the $2,766/month in Q3/2013. The increase resulted from higher overall investments and higher special year-end distributions. The above amounts include all sources of passive income in my taxable accounts, primarily interest and dividends. It excludes my Roth IRA, 401(k) and blog income (which is not passive).